For years, traditional financial institutions have kept their distance from the fintech industry, loath to embrace the trend that is threatening their monopoly over banking, finance, loans and investment.


The result has been beneficial to both parties as well as consumers, who now have access to more efficient and versatile financial services.

As is the case with the rest of the tech industry, fintech startups have the advantage of speed and agility. While banks and financial institutions are slow to adopt new technologies, startups are extremely efficient at implementing emerging trends such as machine learning and Blockchain. Peer-to-peer payments, smart loans and AI-powered fraud detection are just some of the innovations that fintech startups have brought forth.

Using mobile apps and easy-to-use web services, fintech startups simplify many of the services that banks offer. Examples are Acorns, an app that makes investment more accessible and easy to manage, and Mint, an all-in-one resource for creating a budget, tracking your spending and getting smart about your money.

However, to grow and succeed, fintech startups need access to the capital, scale, data and regulatory authority of banks. Testament to the fact are the struggles of online lending companies in recent years.




Partnerships are also proving to be a successful venture in the banking and fintech front. In late 2015, JPMorgan Chase teamed up with online lender OnDeck Capital to provide small business lending services. JPMorgan was spared the effort to develop its own technology while OnDeck, a company that was struggling since its IPO in 2014, obtained access to Chase’s vast customer base. More recently, JPMorgan partnered with LiftFund, a financial and business support organization and microlender, to launch LiftUP, a web-based small business lending platform. LiftUp aims to support minorities and other underserved business owners by increasing their access to capital.

The financial support of financial institutions and the technical prowess of tech startups can help usher the next generation of data-powered financial technologies. In 2016, HSBC funded Xenomorph, a company that provides data management technology to banks, to help accelerate the development of TimeScape EDM+, an analytics and management platform for financial data.

The convergence of traditional and modern financial services is still in its infancy, but so far the results have been promising. According to a Business Insider report, partnerships with fintech startups has helped banks cut the costs of developing customer-facing services and optimizing legacy processes while increasing revenue. Banks and insurers have also been able to benefit from the collaboration to improve customer engagement through cutting edge technologies.

The financial landscape is one of the oldest and most complex components of human society. As it evolves, both banks and fintech startups realize that they need each other to thrive, and by finding the balance and making the right compromises, they’ll be able to adapt to the changing needs of the industry and create opportunities which were inconceivable before.